Cloud Computing: For the Birds, or Busy Bees?

Don’t be confused by the name, cloud computing is not some type of weather machine. Instead it is technology that could save your company time and money.

Rackspace surveyed 1,500 small and medium-sized businesses in the US and UK and found that cloud computing hasn’t really penetrated to a high degree in that marketplace because the terminology elicits confusion. According to the survey, two-thirds of small business respondents don’t know what it is, and a major reason those that know about it say they don’t use it is because they think it will be too expensive.

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So what exactly is cloud computing and what can it offer your business?

Cloud computing is the ability to log on to a Web site and pull up software applications, data storage and server computing power, all from the Internet. It can save your company money on computer hardware and software and free up time to manage more important business.

“A small business doesn’t want to spend a lot of time taking care of computers and software. Any application you can think of is available online as a service,” said Laurie McCabe, partner at Hurwitz & Associates, an IT consulting company.

According to McCabe, cloud computing’s list of benefits is quite long. One pro is the ability to access applications on the road. Just like logging onto a Hotmail or Gmail account, business owners can also access a host of applications for invoicing, customer relationship management and/or book keeping.

And with a cloud application if a new software feature or upgrade comes out the user automatically gets it, said Sean Whiteley, vice president of Product Marketing at Salesforce.com (CRM), a customer relationship management application company.

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“You don’t have to upgrade the software. You don’t have a path to download a new version. You log in one day and all the stuff is better,” he said.

Salesforce.com charges $5 a month per user for its Contact Manager application, $17 a month for its Group edition that includes up to five users and $65 a month for its Professional version that has unlimited users.

“It’s cheaper for a ton of business applications,” said Whiteley. He said cloud computing companies are able to charge low rates, and in some cases nothing at all, because of the multi-tenant model.

With a multi-tenant model the infrastructure is shared among different customers, similar to how tenants in an office building share electricity, water and other utilities and pay less as a result.

“Our data center and applications are shared across our millions of users, which is just a more efficient and cost-effective way for us to provide services to our customers,” said Whiteley.

The multi-tenant model does have its downsides, critics point out, especially if a small business is using cloud computing for its server.

“In a multi-tenant model if your neighbor is doing bad you bear the consequences,” said Tom Kiblin, CEO of Ashburn, Virginia-based Virtacore, a cloud hosting company. Let’s say a small business rents space on a server but one of its neighbors using the same server is a spammer. If the spammer’s e-mail is disabled, so is the account of that server’s IP address. Same goes if a neighbor is hogging processing power; that slows down everyone’s computing power.

But industry players say reputable cloud-computing companies will monitor servers for spammers and are quick to balance the workload whenever necessary.

“A good cloud-computing provider not running on the cheap can police it pretty well,” said John Engates, chief technology officer at San Antonio, Texas-based Rackspace Hosting (RAX).